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Microsoft Faces Lasting Damage from Word Patent Judgment
By: Don Reisinger
2009-08-24
Article Rating:    / 4
There are 3 user comments on this Enterprise Applications story.
Microsoft Faces Lasting Damage from Word Patent Judgment (
Page 1 of 2 ) A federal district court decision that found that Microsoft Word violates an XML technology patent held by a small Canadian company could prove to be a crippling market blow for the software giant's flagship Office desktop productivity package. Microsoft is scrambling for a way to overturn the decision and an injunction that would bar Microsoft from selling Word. But if these efforts fail, even a company of Microsoft's wealth and resources would be hard-pressed to recoup the potential financial losses and competitive setbacks if it has to keep Word off the market for an extended period.If you haven't been brushing
up on the latest news, it's easily one of the most interesting stories in
the enterprise software industry. But it's also one of the more troubling
stories in the space.
If Microsoft loses its battle with i4i, Word as we know it will be gone. Even
as its battle slogs on, an extended period of time when Microsoft isn't selling
Office on store shelves is an even greater problem. The company has been pushing
the court for a speedy trial to ensure that doesn't happen. But whether or
not it can actually prove that i4i's patent on XML file types is invalid is up
for debate. The longer the battle is waged, the more cash Microsoft loses. And
the smaller the chances that it will be able to achieve critical business and
financial goals in the coming years.
Word's Importance
The importance of Word and, by extension, Office, cannot be underestimated.
Office represents the largest
portion of Microsoft's revenue. It's one of the main reasons why the
company has been so successful to this point. Without it, Microsoft would lose
a key revenue stream that it relies on to help it in other areas of its
business. Granted, an XML patent infringement probably won't lead to the
total demise of Microsoft, but it could significantly impact its operation.
While the cash Microsoft generates from the Zune or the Xbox 360 is welcome,
the cash it generates from Word and Office is a necessity. With that cash,
Microsoft can invest in Windows, Office, the Xbox 360, the Zune, Bing and all
of its other endeavors. It relies upon the sale of Office to maintain its
strategy for the future. Most importantly, it relies upon Office to boost its
revenue when other divisions aren't performing as well as they are supposed to.
Without Word, Microsoft would be in a tough position. It wouldn't be able to
invest the cash it needs in all those other divisions. Plans it might have for
Windows, Bing or a future Web-based browser might be put on hold. Updates to
Windows that both enterprise users and consumers are looking for won't be
released.
In the beginning, the fallout might be manageable. But what if i4i proves its
patent case and forces Microsoft to not only pay up, but change its offering?
It could be a disaster for Microsoft.
The Collapse of Office?
Without Word, Office is a shadow of its former self. Companies looking to
have a full-featured productivity suite would need to look elsewhere. Consumers
who want to perform basic work at home would pick an alternative option. Simply
put, Office isn't Office without Word.
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